R&D Tax Credits and Relief

[AndrewK]

I wonder did anybody tried to claim R&D Tax Credits and Relief?
As an example can you purchase of high-end PCs and equipment for machine learning (with multiple GPU) and prototype software development? And claim that for R&D?
Is it worth it?

[northernladuk]

It's worth it if you are doing R&D, which I'm sure you are not.

[AtW]

For hardware you don't get any enhanced relief - first 200k are covered by Annual Investment Allowance anyway, where R&D excels is for salaries (if they qualify, which is not easy under rules), then you get enhanced relief

Be very careful - not every R&D qualifies

This is not a tax or legal advice...

[fullyautomatix]

R&D tax relief is not another mechanism allowing companies to lower the tax obligations. It is there to encourage R&D and people like AtW benefit from it. If you are genuine you would be hiring PHD's and indulging in how R&D into how machine learning can be used to write self driving cars or something like that.

[craigy1874]

R&D tax relief is not another mechanism allowing companies to lower the tax obligations. It is there to encourage R&D and people like AtW benefit from it. If you are genuine you would be hiring PHD's and indulging in how R&D into how machine learning can be used to write self driving cars or something like that.

Not necessarily, a number of my clients have claimed it for working on IT projects, web design etc. although to be fair they aren't PSCs.

[northernladuk]

Not necessarily, a number of my clients have claimed it for working on IT projects, web design etc. although to be fair they aren't PSCs.

They might have claimed it, doesn't mean they did it correctly. We'd need a lot of detail to comment but general projects for a company and web design don't come close to the definition of R&D. A bunch of contractors & permies implementing a new solution for a client/company is not R&D. Last time we discussed this someone said their client was claiming it and after a discussion it wasn't correct.

Projects that count as R&D

The work that qualifies for R&D relief must be part of a specific project to make an advance in science or technology. It can’t be an advance within a social science like economics or a theoretical field like pure maths.

The project must relate to your company’s trade - either an existing one, or one that you intend to start up based on the results of the R&D.

To get R&D relief you need to explain how a project:
•looked for an advance in science and technology
•had to overcome uncertainty
•tried to overcome this uncertainty
•couldn’t be easily worked out by a professional in the field

Your project may research or develop a new process, product or service or improve on an existing one.

Show that you looked for an advance in the field

Your project must aim to create an advance in the overall field, not just for your business. This means an advance can’t just be an existing technology that has been used for the first time in your sector.

The process, product or service can still be an advance if it’s been developed by another company but isn’t publicly known or available.

Show there was uncertainty

You should be researching or developing something that isn’t known to be scientifically or technology feasible when you make or discover it.

This means that your company or experts in the field can’t already know about the advance or the way you achieved it.

Explain how you tried to overcome the uncertainty

You should show that the R&D needed research, testing and analysis to develop it.

You need to be able to explain the work you did to overcome the uncertainty. This can be a simple description of the successes and failures you had during the project.

Show that a professional in the field couldn’t work this out

You should explain why a professional couldn’t easily work out your advance.

You can do this by showing that other attempts to find a solution had failed.

You can also show that the people working on your project are professionals in that field and get them to explain the uncertainties involved.

[Lance]

They might have claimed it, doesn't mean they did it correctly. We'd need a lot of detail to comment but general projects for a company and web design don't come close to the definition of R&D.

10 years ago a client of mine was claiming it. It was a grey area really as it was a hosting company. The argument was ‘it’s a new way of hosting’. It wasn’t really but it was for the client.
They got away with as
1) they were a company with 20+ staff
2) HMRC were falling over themselves for people to use those credits as there was a shortfall.

I doubt a PSC would get away with it. For a start almost all PSCs work is for a client who owns the IP and therefore would be the party to claim those credits.

Nice try though. Why not just buy the gamer’s PC as Visio needs a decent graphics card. And it’s an asset that will last more than 3 years.

[northernladuk]

10 years ago a client of mine was claiming it. It was a grey area really as it was a hosting company. The argument was ‘it’s a new way of hosting’. It wasn’t really but it was for the client.
They got away with as
1) they were a company with 20+ staff
2) HMRC were falling over themselves for people to use those credits as there was a shortfall.

I doubt a PSC would get away with it. For a start almost all PSCs work is for a client who owns the IP and therefore would be the party to claim those credits.

Nice try though. Why not just buy the gamer’s PC as Visio needs a decent graphics card. And it’s an asset that will last more than 3 years.

Not a grey area then....

[northernladyuk]

They might have claimed it, doesn't mean they did it correctly. We'd need a lot of detail to comment but general projects for a company and web design don't come close to the definition of R&D. A bunch of contractors & permies implementing a new solution for a client/company is not R&D. Last time we discussed this someone said their client was claiming it and after a discussion it wasn't correct.

There must be a contractor payment scheme model in here somewhere.

[AndrewK]

It's worth it if you are doing R&D, which I'm sure you are not.

Good for you. But I didn't ask for your as usual useless opinion. I tried to find person with actual knowledge.